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Home News Power Sector News APERC scheme shows a way out of power shortages at a cost

APERC scheme shows a way out of power shortages at a cost

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APERCAndhra Pradesh consumers, hit by unreliable power supplies because of a steep drop in cheaper domestic gas output, are queuing up to buy power at tariffs of Rs 11 per unit under an 'expensive power' scheme recently approved by the state's power regulator. Andhra Pradesh Electricity Regulatory Commission (APERC) has allowed state discoms to sell expensive power to consumers provided they procure power only from gas-based independent power producers such as GVK Extension, Gautami, Vemagiri and Konaseema.

The expensive power will be generated by using imported gas and will then be supplied to consumers on a 'no profit-no loss basis', said APERC officials. The expensive power supply scheme is outside the regular tariff order and was proposed by state discoms to mitigate power shortage problems to the extent possible.

"APERC has taken a decision after receiving comments from all stakeholders," a commission official said.

Andhra Pradesh's initiative is likely to be a trend-setter with the country expected to face acute power shortage in the peak summer months, said government officials.

The production fall in Reliance industries' KG D6 gas fields has also affected India's domestic gas output, leaving several gas-based power projects stranded for lack of fuel. Plants that have came up in the last five years, with a 5,156 mw generation capacity, are either yet to start producing power or have a very low plant load factor. In all, 8,000 mw of gas-based power capacity is running below potential.

"The only solution is to generate power using imported natural gas as there are a set of consumers willing and able to pay the premium," a senior ministry official said, adding that the Andhra scheme could pave the way for more idle capacities coming on stream using imported gas.

Petroleum minister Veerappa Moily has suggested to chief ministers of states with gas pipeline connectivity such as Assam, Andhra Pradesh, Maharashtra and Karnataka to meet electricity demand by importing gas so that a power crisis could be averted, said an official familiar with the development.

The minister has told the CMs that India could use its collective bargaining power while importing natural gas instead of waiting endlessly for domestic gas output to improve. The move may eventually lead to gas price pooling for the power sector, an oil ministry official said.

"Our earlier attempt in this direction was opposed by the power ministry, but in the light of acute shortage of coal and gas, we may reconsider the proposal," the official added.

Gas-based power projects with a proposed capacity of over 20,000 mw are now under construction which would further accentuate the shortages in the future. It is estimated that India would need 291 mmscmd of gas to fuel these plants, but domestic output is only expected to grow to 102 mmscmd by 2016-17.

No new domestic gas output is expected before 2017 and production from Reliance Industries' KG-D6 has now dropped to about 21 million metric standard cubic meters per day (mmscmd) against envisaged peak production of 80 mmscmd, oil ministry officials said.

Source- Economic Times


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